Financial innovations will evolve with global farming

Subject

Financial innovation in European agriculture

Significance

Changes to Europe’s Common Agriculture Policy (CAP) are coinciding with increased political uncertainty to create new supply chain risks for farmers and agribusinesses. For financial services firms, there are opportunities to develop services and tools to manage and transfer critical risks. In 2015, European milk production quotas were abolished. Planting rights and quotas are due to be removed from sugar beet and wine production.

Impacts

• Short-term uncertainty in trade agreements is likely to prompt firms to invest more in risk management.
• Brexit uncertainty may result in more variable demand, encouraging the use of financial services to stabilise incomes and price key risks.
• Ireland is exposed to the Brexit talks as the United Kingdom is a key importer of Irish products and Ireland is a land border with the EU.